Budgeting Basics

Understanding how a budget works will make your job easier — and give you a leg up the next time you pursue a promotion.

About the Instructors

Jimmy Gibbs was hired in 2000 as the first aquatics manager of the Lawrence (Kan.) Parks and Recreation Department. Since then, he has helped oversee the opening of a new, $10 million indoor family and competitive aquatic center. With more than 18 years in aquatics, Gibbs has been an instructor for the American Red Cross for 25 years.

Jim Wheeler is leisure and aquatic services manager of the San Francisco Recreation and Parks Department. He has worked in the field of aquatics for more than 35 years and has been recognized as an Aquatics International Power 25 honoree. He’s also the owner of Total Aquatic Management, an aquatic training and consulting company based in Alameda, Calif.

For today’s aquatics professionals, good fiscal practices and budgeting skills are essential. In good economic times and bad, sound budgeting skills are required to get the most out of our funding for the public we serve.

To be truly effective, we need to understand all aspects of our budgets, including where funding comes from, and the expectations regarding cost recovery and monitoring expenditures and revenue, to stay within guidelines.

Where does the funding come from? Each organization is different, so it’s hard to specifically pinpoint where an agency gets its funding. Most often, organizations operate on “general funds” generated from taxes and other fees for services and permits.

Agency leaders allocate operational funds to specific departments, which then decide how to best use them to meet the public’s needs. This funding — separate from capital funds, used to
build and update amenities and infrastructure — includes staffing facilities and programs, paying for supplies, and covering operational costs.

Money management All operational budgets have two sides: revenue, the money collected for the facilities and programs provided, and expenditures, the costs associated with providing facilities and programs. When we analyze how much revenue we bring in and compare it with the money we expend to do business, the ratio of revenue to expenditure becomes our “cost recovery.” For example, if we bring in $500,000 and spend $1 million, then our cost recovery is 50 percent.

Watch it The last element of budgeting basics is perhaps the most important: vigilant monitoring. To make sure you stay on track, it’s essential that you understand your revenue goals and track monthly revenue. Also, keep careful records of expenditures to ensure that you do not overspend the funds allocated to your program area.

Growth strategies

Once you understand these basic budgeting concepts, take the time to learn about the principles of cost analysis modeling and performance-based budgeting.

Such advanced budgeting concepts allow proactive professionals to understand the true costs associated with operation. True costs become particularly important when you’re proposing new services or programs. It’s also crucial in projecting real budget outcomes that the public, and decision-makers, can understand and use to prioritize funding requests.

Agency administrators and elected officials appreciate an understanding of budgeting, and with a little effort you can master it. The best professionals with whom I have worked all had solid basic budgeting skills. They understood where funding came from, how much money they were allowed to spend and how much revenue they were expected to generate.

They evaluated all the costs associated with offering facilities and programs so they could analyze potential savings and become more efficient and effective. They knew how much they had spent and how much they had generated without too many visits to the finance department because they tracked and monitored their own budgets so well.

In short, developing a good understanding of how a budget works will make your job easier, and it can give you a leg up next time you pursue a career advancement opportunity.

And don’t be afraid to ask for information and help when you need it. Develop a good working relationship with those in the finance department of your agency, and it will pay off. Getting accurate, timely information can help avert potential overspending, which can be costly to the agency and your career.